singapores life industry posts

The bullish performance comes as many European and American insurance industry giants are increasingly looking to Asia and other emerging and frontier markets for growth, as sales in their home markets languish. By 2020, according to one estimate, Asia is expected to account for 40% of the global market for insurance.

Against this backdrop, the Life Insurance Association of Singapore (LIA) said today that total weighted new business sales – which are computed by using a formula that incorporates single and regular premium sales – hit S$2.8bn ($2.2bn, £1.33bn) in Singapore last year, up from S$2.2bn in 2012.

Sales of annual premium products grew by 31%, to S$2.1bn last year, while weighted single premium sales rose 20%, to S$700m, according to the association, which represents Singapore's insurance product providers and life reinsurance providers.

Of this amount, sales made under the auspices of Singapore's Central Provident Fund (CPF) – a government scheme aimed at encouraging Singaporeans to save for their retirement – accounted for around 16%, the Life Insurance Association said.

The so-called defined market segment (DMS) of Singapore's insurance industry, which is comprised of just six companies, including the likes of Friends Provident International, Generali, Royal Skandia, Transamerica and Zurich International, accounted for 4% of sales last year, while companies with "normal" licenses generated the remaining 96%. This represents a slight decline in the DMS share, which recently has been averaging around 5%.

The defined market segment is so-called because it caters for a high net worth market that is defined by a minimum premium size, and its members are not permitted, under their licences, to handle CPF business.

'Momentum maintained'

LIA president Khoo Kah Siang noted that there had been a “slight dip” in sales in the fourth quarter, but the industry nevertheless maintained its  momentum “to end the year with improved growth over the previous year”.

 “Annual premium products were the biggest drivers of growth for the year, echoing a more stable market environment and improved consumer sentiment,” Khoo added.

Health insurance  was among the Singapore insurance industry's best-performing market segments last year, with new health insurance premiums leaping 145% compared to the same period last year, to  S$456m. Most of this amount – 94% – went to so-called Integrated Shield Plans and riders, according to LIA. Integrated Shield Plans are offered by private insurers, while MediShield is a low- cost, basic medical insurance scheme run by the Central Provident Fund board, which was introduced in Singapore 24 years ago. 

In line with an upward revision to the benefits and premium rate of the basic MediShield plan in March 2013, participating Integrated Shield Insurers also enhanced their plans last year, the LIA noted.

Forward outlook

Khoo said the industry is expected to maintain its momentum into 2014, increasingly influenced by two developments that are coming onstream: the launch of MediShield Life – an extension of the MediShield range, announced last year – and the scheduled implementation of a new direct-to-consumer insurance distribution channel, recommended by the Financial Industry Review (FAIR) panel. 

As reported, Monetary Authority of Singapore  managing director Ravi Menon has stressed the importance of the insurance industry to Singapore, and last year said the city-state would look to boost its position as a regional insurance marketplace. 

Source: Life Insurance Association of Singapore

*The weighted new business premium figure is calculated as follows: 10% SPI + 100% API, with adjustment for premium payment terms of less than 10 years